*************

The following is the full text of a speech by the Secretary for Economic Services, Ms Sandra Lee, at the Opening Ceremony of the Airport Business 2001 Conference and Exhibition today (November 13): (English only)

Mr Howe, Dr Fung, Distinguished guests, Ladies and Gentlemen,

It is my great pleasure to join you this morning for the opening of the Airport Business 2001 Conference and Exhibition. On behalf of the Hong Kong SAR Government, I would like to extend to you all a warm welcome. We in Hong Kong are honoured to be hosting this prestigious event. I must congratulate the Airport Council International and the Airport Authority Hong Kong on the excellent arrangements.

Many of you will be aware of Hong Kong's strategic location, with a strong manufacturing hinterland in the Pearl River Delta and half of the world's population within a radius of 5 hours' flying time. This has enabled us to develop a competitive advantage in transportation and logistics services. We now have the busiest container port and busiest international cargo airport in the world.

And we are determined to build on these strong foundations. The Chief Executive, Mr Tung Chee Hwa has announced in his recent annual Policy Address, new measures to further develop Hong Kong as a logistics hub. Naturally, a top-rate air services network will play an important role in this 'Logistics Hong Kong' initiative. Those of you who visited Hong Kong before July 1998 will no doubt remember the rather unique - some would say surprising - experience of landing at our old international airport at Kai Tak. The airport was squeezed between densely populated and older parts of Kowloon. It operated beyond capacity and was very congested. And there was no space for expansion.

Since the opening of the new Hong Kong International Airport at Chek Lap Kok in 1998, capacity constraints are no longer an issue. This has, in turn, allowed the Government to proactively and progressively liberalise the air services regime to expand our air services network, to promote competition and provide greater choice for consumers. As a result of our air services network expansion, we now have some 65 international airlines operating 3 700 flights per week connecting Hong Kong with 130 cities.

It is important to note that a good air services network cannot be judged solely on number of fifth freedom rights. We must provide reliable and stable services. We believe that unlimited fifth freedom rights, or so called 'open skies' with any particular aviation partner of Hong Kong, may not be the only way to achieving our goals for expansion with reliable services. When considering the exchange of traffic rights under the current bilateral air services regime, we must take into consideration Hong Kong's overall economic interest, fair and equitable opportunities for both sides and a level playing field.

I want to assure you that Government will continue to liberalise our air services regime to serve Hong Kong's best economic interest. As much as possible, we will facilitate the operational or investment plans of airlines, whether based in Hong Kong or not. But we will, like most of you in business, like to see concrete plans in order to give them proper consideration and as always, we will maintain a level playing field for all.

Any increase in air services or air traffic must be supported by adequate facilities. Dr Fung has just outlined the Airport Authority's master plan to boost our airport's competitiveness, connectivity and accessibility, and to realise the full potential of its design capacity. The Government will continue to work closely with the Airport Authority in taking forward this master plan.

As we are all well aware, the aviation industry is experiencing some turbulence at the moment. Pilots will tell you that there are ways to avoid rough weather - you can change course, or fly above it all. But sometimes your choice may be limited and the best way to reach your destination is to maintain your heading and punch on through a patch of choppy air. The same applies to a whole spectrum of companies involved in the aviation industry, which is facing substantial challenges at the moment. But challenges bring opportunities. And in Hong Kong there are opportunities on the horizon - particularly as we implement our airport master plan and devote more time and resources to honing our strength as a logistics hub.

In this regard, there is one thing you will not have to worry about and that is the business environment in Hong Kong. International corporations have been moving into Hong Kong in the past few years. We now have more than 3 200 international corporations with regional headquarters or offices in Hong Kong - an increase of almost 750 over the past two years. They are attracted by a number of factors but notably our low taxes, political stability, safety, the free flow of information, a clean and efficient government and world-class transport and communications infrastructure. As a government we also place great importance on maintaining our tried and trusted legal system and our level playing field for business. Hong Kong is one of the best cities in the world for business and the premier services centre in Asia. We are Asia's world city. We would welcome any investment from companies represented here or from any other parts of the world.

Ladies and gentlemen, the September tragic events in the United States, and sadly the incident last evening, have added a new dimension to your conference this year. Like you, I want to see a stable and profitable aviation industry around the world. I do not believe that the recent happenings will, in the long run, be able to turn back the tide of greater interaction within the global community. But perhaps we may have to do things a bit differently than we had originally planned. I am sure that over the next three days you will have some very interesting and useful discussions concerning this and other issues. I wish you all a very fruitful conference and an enjoyable stay in Hong Kong. And make sure you come back to visit us and set up your company here.

Thank you.

End/Tuesday, November 13, 2001

NNNN